Cities Where You’re Most Likely to Live Paycheck to Paycheck – And Save the Most 

Dr. Francesca Ortegren's Photo
By Dr. Francesca Ortegren Updated January 3, 2023


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Nearly 38.1 million Americans live in poverty, where being able to afford basic necessities can be a struggle. Even those who earn more average wages struggle to make ends meet. According to a survey by CareerBuilder , almost 80% of workers in the U.S. live paycheck to paycheck (including 10% of those earning six figures).

Spending the majority of one’s paycheck before the next payday induces a slew of problems, including stress and not being able to save for the future. Financial experts suggest people live by the 50/30/20 rule, which lays out the percentage of income that should go toward living expenses (50%), discretionary spending (30%), and savings (20%).

It’s unlikely that people are saving 20% of their income if the vast majority are barely scraping by, especially when we consider that Americans hold $4 trillion in debt (excluding mortgages).

What’s more, where you live impacts your weekly expenses. The cost of various goods and services vary by location, with places like San Francisco and New York City being some of the most expensive metros. In contrast, costs are lower than average throughout the Midwest.

You might assume that wages in more expensive areas cover cost of living expense differences, but that’s not always the case. In fact, when we controlled for cost of living, per-capita income annual income ranged from $31,853 to $95,209 in the most populous metropolitan areas in the U.S., suggesting that income’s variation goes beyond cost of living adjustments.

It’s reasonable to expect residents in places like San Francisco, where the cost of living is 225% of the national average, to struggle paycheck to paycheck due to exorbitant living expenses. How can people in these areas possibly save build emergency funds or save for retirement?

The truth is, people in these high-cost cities are finding ways to manage their expenses.

To dig deeper into issues of living expenses across the U.S., we looked at the 75 largest metros in the U.S. for trends. We calculated the amount of money people had left at the end of each pay period using per capita bi-weekly (2x per month) income minus taxes and living expenses — which included housing, utilities, health, groceries, and non-recreational goods and services.

Note that all dollar amounts refer to calculations on a per capita basis, assuming two paychecks per month, for a total of 26 paydays, unless otherwise noted.

We found that the average American has less than $140 left over each paycheck, and even less in certain metros across the U.S., but where you live has a big impact on how much you can save.

Residents in the top 75 metros (above) tend to save more than the national average, indicating saving is harder for people living in smaller cities. Where you live matters, and it has a direct impact on what you’re able to save towards retirement and discretionary spending. This report also reveals what residents of high-cost areas are doing to survive when their expenses are so high.

Key Insights

  • The average American spends nearly 60% of their income on living expenses; only 13 of the 75 most-populous metros spend less than 80%
  • The typical American has less than $140 left over each paycheck (measured bi-weekly)
  • People are more likely to live with roommates in places with higher rents to afford the high costs of living
  • Living in an area where rents are high (e.g. San Francisco) doesn’t necessarily mean residents are unable to save; many residents make lifestyle changes to save more than the average American
  • A regression analysis revealed that people earn an additional $352 annually for each 1% hike in cost of living, meaning people earn more in places that cost more
  • According to Zillow , 30% of adults lived with at least one roommate in 2017, up from only 22% in 2000
  • 31% of Americans have delinquent debt in collections
  • About 14% of income is allocated toward housing and utilities (per person)
  • 6% of metro residents live in poverty despite being employed
  • The largest share of per capita spending goes toward housing and utilities ($403), followed by miscellaneous goods and services (including home, auto, health, and other insurance, $348), transportation ($224), healthcare (not including insurance, $160), and groceries ($137)
  • Southern residents are more likely to live below 125% of the poverty level

Fast Facts

  • Residents of McAllen, TX; New Haven, CT; Riverside, CA; New York City, NY; Orlando, FL; and San Antonio, TX don’t earn enough to cover the average living expenses in their area
  • Those in Bridgeport, CT; San Jose; Tulsa; Raleigh; Charlotte, NC; and Nashville earn enough to save over $1,000 each month
  • Residents in San Francisco; Bridgeport, CT; San Jose, New York City; and Los Angeles spend the most on housing and utilities
  • Housing and utilities are least costly in McAllen, TX; El Paso; Greensboro, NC; Columbia, SC; and Tulsa
  • People are more likely to live with roommates where rent is high, with the largest shares of co-paying adults living in San Jose, Austin, San Diego, and San Francisco
  • Analyses by Statista indicate that people in our spendiest metros also spend the most each month on ride-sharing apps
  • Those in the south are more likely to have delinquent debt: McAllen, TX; Columbia, SC; Baton Rouge; El Paso; Memphis; Greenville, SC; Charleston, SC; Dallas; and Tulsa have the highest rates of debt in collections
  • Fewer than 20% of residents in Boston, Omaha, Seattle, Honolulu, San Francisco, and Minneapolis have delinquent debt
  • Over one-quarter of people living in El Paso, Bakersfield, Fresno, and McAllen earn less than 125% of the poverty level compared to 11% in Washington, D.C. and San Jose

How People Living in High-Cost Cities Manage Expenses

Each American spends about $1,272 each paycheck (i.e., every two weeks) on non-recreational goods and services.

The largest share of spending goes toward housing and utilities ($403), followed by miscellaneous goods and services (including home, auto, health, and other insurance, $348), transportation ($224), health care (not including insurance, $160), and groceries ($137).

Consumption of goods and services accounts for nearly 60% of the average person’s $2,147 bi-weekly income. But people spend differently depending on whether they live in an urban area or non-urban area.

Non-urban residents spend slightly more on average (~$1,276) than people who live in urban areas ($1,269) every paycheck, but those who live in urban America spend more on housing than those in non-urban areas.

You might expect that people in a cheaper metro like San Antonio, where one-bedroom apartments rent for $995 on average, to be able to save more than people in San Jose, who spend an average of $2,667 for a one bedroom.

In fact, the opposite is true: We found a significant correlation between median rent prices in a metro area and people’s leftover income after living expenses such that higher rents were related to more money saved at the end of the pay period.

The trend that higher rent equates to more savings is counterintuitive, but it’s clear that people who live in places where rent is unreasonably expensive make adjustments to be able to afford living expenses.

Home buying is expensive in these regions and requires a qualified buyer's agent .

People in more expensive places, for instance, are more likely to live with roommates than those in cheaper areas. According to an analysis from Zillow, more adults are living with roommates than ever before. They approximate that over 30% of adults lived with at least one roommate in 2017, up from only 22% in 2000.

The increasing allure of cohabitation helps offset the rising costs of housing. The average rent for a one-bedroom place in the United States is $1,005 per month, but it’s much higher in some parts of the country.

In San Francisco, for instance, a one-bedroom apartment could cost nearly $3,500 a month . That’s over 40% of the average San Franciscan’s income and hardly affordable. A two-bedroom apartment runs for about $4,600, which is much more reasonable when split between two people. In fact, splitting an apartment at that rate saves each person $800 monthly compared to what they’d spend living alone in a one-bedroom.

Consistent with our previous analysis that higher rents are correlated with more savings, we also found that people are significantly more likely to live with roommates when rent is higher.

Sharing the cost of rent with one or more roommates is an intelligent way to offset some costs associated with expensive locations like San Francisco; and it clearly allows people to put more money into savings. So, some of the high-cost-of-living metros could be great locations for young people if they’re looking to save some cash.

The relatively higher incomes might play a role here, too. A regression analysis revealed that people earn an additional $352 annually for each 1% hike in cost of living, meaning people earn more in places that cost more.

The average person in San Francisco earns about $99,400 per year compared to the $26,400 a McAllen, TX resident earns. So even though people in San Francisco do spend more cash on living expenses, they’re not just making smart lifestyle adjustments like living with roommates, but they earn enough to cover the rest of their expenses (and then some).

Those savings, however, don’t equate to being able to afford a down payment on a home faster. To afford the advised 20% down payment on a typical home (with a median Zestimate of $1,082,771) in the Bay Area, a person would need to save $216,554. Even if you took all $433.62 saved each paycheck, it’d take 19 years to save up that down payment.

Compare that to Jacksonville, Florida, where people only save about $144 per paycheck. The median home value is $227,269, so a prospective home buyer would only need to save up $45,454 to hit that 20% down payment threshold. That’d only take your typical Jacksonville resident 12 years of saving.

Saving every extra cent you earn for over a decade isn’t realistic, and these data lend credence to the idea of saving your high income for some time then moving to a lower cost of living area.

Many people, for instance, live in cheaper areas within metros, like suburbs. People in the bay area can save a ton on housing if they buy in Oakland where the median home value is a "measly" $755,000 instead of San Francisco proper, where the median value is nearly $1.4 million.

Overall, people are doing well in high cost areas by earning more and sharing housing with roommates. This allows people in places like San Jose, California to save a lot more money than people in San Antonio, Texas. But it comes with some inconveniences, like less privacy and smaller apartments.

Note: If you're thinking about investing in one of these areas, make sure to use our property rental calculator to ensure the numbers add up.

Delinquent Debt More Likely Where More People Live Below 1.25x the Poverty Level

Approximately 12% of Americans live in poverty, meaning they earn less than the poverty threshold for their household. For a family of four, that translates to earning less than $26,200 in most states.

Many more are underpaid, with household earnings less than 125% of the poverty threshold. That same family of 4 in this case would earn less than $32,750. Nearly 18% of Americans earn less than 125% of the poverty threshold for their households.

According to Health Affairs, research has observed significant relationships between income and health — particularly death and disease. People with low wages are less likely to have health insurance, are more likely to engage in disease risk factors like smoking, have less access to healthy, fresh foods, and experience chronic stressors that bump the risk of disease even more.

But poverty and low wages doesn’t just impact those people, income inequality can hinder economic growth as well. One prominent hypothesis suggests that low-income families are less able (and therefore less likely) to invest in education and skills, which reduces the overall productivity of the workforce.

Moreover, people who earn less are less able to contribute to the economy through consumership. And, when they do, they’re likely to accumulate debt.

According to data from the Urban Institute, 31% of Americans have delinquent debt in collections; and the likelihood of delinquent debt inequitably impacts southern states. Texans, for instance, are 55% more likely to have debt in collections than Washingtonians.

The share of the population with debt in collections is directly related to wages in the 75 most-populous metros. A regression analysis revealed that a 1% increase in the percentage of people with delinquent debt in a community boosts the likelihood that people earn under 125% the poverty level by 4%. In other words, there’s a cycle of poverty where low income families need to take out debt that compounds with interest, creating a mountain of unscalable debt.

A survey by the Pew Research Center showed that nearly 75% of Americans believe that hard work is the key to "getting ahead in life," and only 18% noted "belonging to a rich family" as an important factor, suggesting that most Americans don’t acknowledge the treacherous poverty cycle that keeps the poor poor for generations.

According to a recent analysis by Clever Real Estate , the average U.S. household holds over $30,000 in debt and over half of Americans break even or spend more than their income each year. And people’s debt can spiral out of control quickly after emergency medical treatment or missing a payment on a credit card.

Rising debt isn’t just a problem in low-income communities, but the ability to invest in education — particularly financial education — to climb out of debt is limited to those with discretionary income. So people in or close to poverty levels inevitably get left behind.

The accumulation of more debt for people who earn less is not ideal for obvious reasons, including the continued inability to get out from under costly interest and fees. Unfortunately, most low-income families don’t have the resources or skills to break the cycle.

Living Expenses Vary by Location

Housing and Utilities Drive Cost of Living Differences

Differences in the cost of housing is the largest driver of cost of living differences across the United States, which impacts people’s ability to afford homes and the amount of money they have to spend on other goods and services.

As mentioned above, our analyses suggest that people who live in areas with high housing costs tend to sacrifice living alone in order to make it work.

It’s important to note that housing expenses appear low because these are per person (not per household) bi-weekly expenses. Monthly household expenses per person are doubled, and multiplied by the number of people in each household. The expenses on housing for a household of two in San Jose, for instance, would cost in the neighborhood of $2,000 each month.

Moreover, our analyses include data from entire metropolitan statistical areas (not just the principal cities listed in the figures). Because areas outside the principal cities are typically more affordable, the averages are lower than they would be otherwise. For example, the average rent in San Francisco city is $3,688 but is 20% cheaper ($2,908 ) only 12 miles away in Oakland.

Selling a home in these areas is extremely costly, and might drive some homeowners to consider discount options, like a discount real estate agent or flat fee MLS service.

Metro residents are typically aware of the cheaper living options and most people live in the areas right outside of metro principal cities , like the suburbs, to save on housing.

Grocery Spending Depends on Location

Bi-weekly grocery costs ranged from about $95 to $173 in the most populated metros. In the top 10 most expensive metros for groceries, Connecticut made an appearance three times, along with Massachusetts, Florida, D.C., Hawaii, and Oregon.

Hawaii’s higher groceries can likely be attributed to the costs associated with transporting goods to the islands. But the other cities and states on the top of our list don’t have much in common except that they’re pricier to live in general.

Northeast Spends the Most on Health

The 5 most-expensive metros for health were located in the Northeast United States. This category didn’t include health insurance, so it’s likely that health services cost more in these areas. A cesarean delivery costs over $13,000 in the Philadelphia metro. That same hospital service leaves New Orleanians with a bill of only about $6,000 .

Contrarily, people spent the least on health in the South and the West, with Tucson, AZ residents spending less than half than D.C. residents.

Transportation Accounts for Smallest Share of Income

Spending on transportation accounted for about 5% of people’s living expenses. According to the Bureau of Transportation Statistics, the average household spends nearly $10,000 annually on transportation and spending has increased year after year.

People tend to spend more on transportation in larger metro areas, like New York City, Boston, and Los Angeles. The higher spending in those areas is likely due to residents’ use of ride services, like Lyft or Uber. Analyses by Statista, indicate that people in our spendiest metros also land in the top of the metros where people spend the most each month on ride-sharing apps.

In Boston (#2 spender on both our transportation spending list and Statista’s ride-sharing spending list), people spend an average of $150 each month on rides.

Non-Recreational Goods and Services Spending Highest in Northeast

The last category encompasses all non-recreational spending that doesn’t fall into the above categories, such as clothing, shoes, and personal care products.

The majority of the thriftiest metros are in the South where the cost of living is relatively low. People in Greensboro, NC, for instance, spend a little over $1,000 per month on goods and services, whereas people living in the more expensive Washington, D.C. spend over twice as much.

Notably, this doesn’t necessarily mean people in D.C. and NYC are buying more, just that it costs more. When controlling for cost of living differences, people in New York City spend only $40 more than the median but over $370 more than the median when cost of living is a factor.


To calculate left-over income after living expenses, we subtracted income tax and spending from income.

Income data were per-capita income values gathered from the Bureau of Economic Analysis for each metropolitan area included in our analysis. We calculated per-capita income tax by gathering state-wide taxes paid to the IRS in 2018, divided by the population of the state. The tax value was subtracted from the per-capita income to estimate annual per-capita discretionary income.

Per capita consumer spending was then calculated using state-level BEA consumer spending reports. The reports include per capita spending of various goods and services by state. We categorized each as either total spending, housing and utilities, transportation, health, groceries, or miscellaneous (non-recreational goods and services that were not included in the former categories) expenses.

The sum of spending in each category was multiplied by the state’s cost of living values for each respective category. Cost of living indexes for each category were gathered from Sperling’s Best Places (for each metro and state in our analysis). Once the baseline cost was calculated, we multiplied those values by each corresponding metro’s cost of living index for each category.

Put simply, spending on a particular type of item (e.g., housing) was divided by the cost of living index for that type of item in each state (e.g., housing in New York state), then multiplied by the cost of living index for that type of item for each metro within the state (e.g., New York City metropolitan area). This allowed us to estimate average spending at the metro level.

The overall spending category was subtracted from the derived discretionary income amounts to establish the amount of money left over at the end of the year. To depict per-paycheck spending, we divided the values by 26 (i.e., paycheck every 2 weeks).

Delinquent debt rates were aggregate values from Urban Institute’s data on debt in collections in each county in the U.S. We used FIPS to CBSA crosswalks to match counties to the metros in our list and averaged the percentage of debt in each of those counties to estimate the proportion of the population in the metro with debt in collections.

The proportion of the population who lives with roommates was derived from Census ACS data. We divided the number of people in each metro living in non-relative households with roommates by the total number of people in non-relative households to calculate the percentage.

The percent of people living in poverty and under 125% of poverty in each metro was gathered from the Census ACS with no calculations.

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